The industry has highly evolved in recent years, especially due to the introduction and integration of information technology. One of the latest trends in digital technology is powering doorstep banking, which means that the client is provided with the services of a bank at his or her home.
This blog post aims to describe how digital technology is powering doorstep banking, explaining in detail how digital technology supports them and what its strengths and issues are, as well as its prospects.
Digital Technology is Powering Doorstep Banking: Rise of Doorstep Banking
The need for self-service banking solutions has increased immensely, especially since the outbreak of the COVID-19 virus. While people looked for a safer alternative to conventional banking, doorstep banking became a possibility. This model helps in the delivery of services to customers individually, thus making banking easier for those in rural areas who are not well served by banks.
Related: Chatbots in Banking: New Era of Personalized Fintech Services
Key Drivers of Growth: How Digital Technology is Powering Doorstep Banking
- Increased Demand for Convenience: Customers are getting picky and would go for anything that would not take much of their time. Doorstep banking caters for this need by taking banking facilities to them—the doors of their homes.
- Technological Advancements: Technological advancements, especially in mobile technology, biometric authentication and secure transfer of information, have extended the possibility for banks to address the issue of doorstep banking solutions.
- Financial Inclusion Initiatives: International and national monetary organizations and governments insist on the necessity of increased levels of financial literacy; thus, door-to-door service is one of the principal approaches to accessing the still unbanked population.
Comparison of Traditional Banking vs Doorstep Banking
| Feature | Traditional Banking | Doorstep Banking |
|---|---|---|
| Accessibility | Limited to physical branch locations | Highly accessible, with agents reaching customers in remote areas |
| Convenience | Customers must visit branch during business hours | Agents provide services at customers’ preferred times and locations |
| Financial Inclusion | Struggles to reach unbanked populations | Enables financial inclusion by bringing services to underserved communities |
| Cost | High operational costs associated with maintaining branches | Lower costs due to reduced infrastructure requirements |
| Personalization | Limited ability to tailor services to individual needs | Agents can provide personalized attention and guidance to customers |
| Transactions | Customers must visit branch to perform transactions | Agents can perform a wide range of transactions, including account opening, cash deposits and withdrawals, and bill payments |
| Security | Relies on traditional authentication methods | Utilizes biometric authentication and secure data transfer to ensure transaction security |
| Compliance | Adheres to banking regulations and guidelines | Agents must be trained to ensure compliance with regulations |
Table 1: Comparison of Traditional Banking vs Doorstep Banking
Case Study: India Post Payments Bank (IPPB)
IPPB in India for instance, has effectively introduced how digital technology is powering doorstep banking as a measure to boost financial inclusion. Through the utilization of digital technology, it offers services such as savings accounts, money transfers, and bill payments to the customers’ doorstep.
According to the bank’s CEO, Suresh Sethi, he also supports the idea of easy access and expansion when he says, “A nation can only grow when every citizen gets an opportunity to prosper.”
Case Study: Equity Bank in Kenya
Equity Bank in Kenya has also embraced how digital technology is powering doorstep banking to reach underserved communities. Through their “Equitel” mobile banking platform, customers can access a range of services, including account opening, money transfers, and bill payments.
The bank has leveraged its extensive agent network to provide doorstep services, particularly in rural areas. This initiative has contributed to Equity Bank’s success in increasing financial inclusion in Kenya, with over 14 million customers as of 2021 .
Must Read: Why Kenyans Are opposing The Kenya Finance Bill 2024
Key Components of how Digital Technology is Powering Doorstep Banking
Digital technology is powering doorstep banking, which has played a crucial role. Here are the essential components:
- Mobile Devices and Tablets: Agents use handheld devices to access banking systems, allowing them to perform transactions and provide services in real-time.
- Digital Onboarding: This process simplifies account opening for customers. Agents can complete the onboarding process at the customer’s location using biometric verification and document scanning technology.
- Secure Data Transfer: Ensuring the security of customer data is paramount. Advanced encryption and secure connections protect sensitive information during transactions.
- Real-Time Updates: Agents can upload transaction details and customer information instantly, ensuring that the bank’s central hub is always updated.
| Component | Description | Benefits |
|---|---|---|
| Mobile Devices and Tablets | Agents use handheld devices to access banking systems and perform transactions | It enables real-time service delivery and data synchronization with the bank’s central hub |
| Digital Onboarding | Simplifies account opening process using biometric verification and document scanning | Reduces paperwork and allows agents to complete onboarding at the customer’s location |
| Secure Data Transfer | Ensures the security of customer data using advanced encryption and secure connections | Protects sensitive information during transactions and builds customer trust |
| Biometric Authentication | Verifies customer identity using unique physical characteristics, such as fingerprints or facial features | Prevents fraud and unauthorized access to accounts, particularly in areas with low literacy rates |
| Cloud Computing | Enables secure storage and real-time access to customer data from anywhere | Allows for scalability and ensures agents have up-to-date information to serve customers effectively |
| AI and Machine Learning | Analyzes customer data to offer personalized services and improve fraud detection | Enhances the overall banking experience and reduces risk |
| Blockchain Technology | Creates a decentralized, tamper-proof record of transactions to prevent fraud | It increases transparency and builds trust in the banking system |
| IoT Devices | Collects real-time data on customer behavior and preferences to tailor services | Automates certain banking processes, such as bill payments and account monitoring, for added convenience |
Table 2: Key Components of Doorstep Banking Technology
Biometric Authentication
Facial recognition, fingerprint scanning, and other similar technologies are essential in guaranteeing the security of many doorstep banking transactions. Since the patterns identified by the biometric approach are unique to every individual, a bank can successfully avert fraud and any form of compromise of the customer’s account.
This technology is most useful in regions with low literacy levels, where other forms of authentication might not be as successful.
Cloud Computing
This concept helps the new banks to be able to store and retrieve customer’s information through the Internet and thus forms a significant part of doorstep banking.
Thus, using partners and agents, the banking institutions can be confident that clients’ data is available in the cloud and can be processed by the agents. It also offers scalability in that organisations such as banks can be able to handle changes in demands from clients without the need for more hardware.
Benefits of Doorstep Banking
Doorstep banking helps all the stakeholders for various reasons and is thus quite popular among the customers and the banks.
Improved Accessibility
Digital technology is powering doorstep banking, therefore greatly increasing the level of financial inclusion among the targeted groups. Customers based in rural areas can easily run their businesses and undertake their financial transactions without having to visit any branch since they can do it online.
Increased Convenience
Since the services are offered at the customers’ homes, other factors such as time and effort are also saved by the banks. Such convenience can, in turn, result in more satisfied customers and, hence, customer loyalty.
Enhanced Financial Inclusion
This basically adds up to ensuring that the unbanked populations get basic access to services such as doorstep banking. This inclusion benefits the economy and is a strength for individuals.
Reduced Operational Costs
For banks, it is beneficial because it reduces the operational costs that are related to the establishment of physical offices. Agents and technology thus act as tools, enabling banks to satisfy more customers with efficiency.
Personalized Service
In doorstep banking, the agents get the opportunity to pay individual attention to the customers and place emphasis on ascertaining their loyalty.
A good example is that by understanding customer needs, agents in the banking sector can help in providing the right financial products and services, boosting the delivery of banking services.
Challenges and Considerations on how Digital Technology is Powering Doorstep Banking
Despite its benefits, doorstep banking faces several challenges that need to be addressed.
Security Concerns
With increased digital transactions, the risk of fraud and data breaches rises. Banks must implement robust security measures, including biometric authentication and encryption technologies.
Agent Training and Management
Effective training is essential for agents to provide quality service and ensure compliance with banking regulations. Continuous support and management are necessary to maintain service standards.
Regulatory Compliance
Banks must navigate various regulatory requirements when implementing doorstep banking. Compliance with these regulations is critical to avoid legal issues and maintain customer trust.
Infrastructure Limitations
In some regions, limited access to reliable electricity and internet connectivity can hinder the effectiveness of doorstep banking. Banks must address these infrastructure challenges to ensure seamless service delivery.
Cultural Barriers
In certain communities, there may be cultural barriers to adopting digital banking services. Banks must engage with local stakeholders and conduct awareness campaigns to overcome these barriers and build trust in doorstep banking.
Use Cases and Examples
Several banks and financial institutions have successfully implemented doorstep banking, showcasing its potential.
State Bank of India (SBI)
SBI has initiated a home banking facility where services can be demanded on home requests from a specific website. The agents are thereafter assigned to customers upon commendation and approval of services such as cash decision and withdrawal services.
Nelito Systems
Nelito delivers the doorstep banking solution that enables the agents to be aware of the banking particulars in real-time. By using this system, banks are able to capture new clients while at the same time cutting down on the time taken to process a number of banking services.
Airtel Payments Bank in India
Airtel Payments Bank, that was formed as a joint venture between Bharti Airtel and Kotak Mahindra Bank, has adopted doorstep banking to solve the problem. Thanks to the large number of outlets and agents, Airtel Payments Bank can provide services such as account opening, funds transfers, and bill payments at the customer’s residence. As of 2021 , this has greatly contributed to the expansion of the bank and thus marked it as having over 55 million customers.
Fidelity Bank in Nigeria
In the case of Fidelity, A Nigerian base bank has adopted a banking method known as doorstep banking known as Fidelity Smart Agent for improved financial intermediation.
The bank has mobilized and empowered a number of agents with mobile phones and biometric facilities to offer services like account opening, depositing and withdrawing money, payment of bills, etc.
This has been very effective in needy areas across the country, thus helping Fidelity Bank enhance its quest to attain a more heightened economic capability in Nigeria.
Statistics on Doorstep Banking and Financial Inclusion
| Statistic | Value | Source | Description |
|---|---|---|---|
| Global Unbanked Population | 1.4 billion | World Bank (2021) | Approximately 1.4 billion adults globally do not have access to a bank account, highlighting the need for accessible banking solutions. |
| Increase in Mobile Banking Users | 67% | Statista (2023) | The number of mobile banking users worldwide is projected to reach 2.5 billion by 2024, reflecting the growing reliance on mobile technology for banking services. |
| Financial Inclusion Rate in India | 80% | Reserve Bank of India (2022) | The financial inclusion rate in India has increased significantly due to initiatives like doorstep banking, with 80% of adults having access to formal financial services. |
| Growth of Digital Payments | 25% CAGR | Allied Market Research (2022) | The digital payment market is expected to grow at a compound annual growth rate (CAGR) of 25% from 2022 to 2030, indicating a shift towards digital transactions. |
| Doorstep Banking Adoption Rate | 30% | McKinsey & Company (2023) | Approximately 30% of banking customers in emerging markets have adopted doorstep banking services, showing a growing acceptance of this model. |
| Customer Satisfaction Rate | 85% | Deloitte (2022) | An 85% customer satisfaction rate has been reported for doorstep banking services, indicating that customers appreciate the convenience and personalized service. |
| Cost Savings for Banks | 40% | PwC (2023) | Banks utilizing doorstep banking can reduce operational costs by up to 40% compared to traditional branch banking models. |
| Increase in Financial Literacy | 50% | FinMark Trust (2022) | Financial literacy among unbanked populations has increased by 50% due to doorstep banking initiatives, empowering individuals to make informed financial decisions. |
| Average Time Saved per Transaction | 15 minutes | Customer Insights Report (2023) | Customers save an average of 15 minutes per transaction when using doorstep banking compared to visiting a physical branch. |
| Number of Doorstep Banking Agents | 1 million | Global Banking Alliance (2023) | There are over 1 million doorstep banking agents worldwide, facilitating access to banking services in remote and underserved areas. |
The Future of Digital Technology in Powering Doorstep Banking
The possibility of doorstep banking increasing over the years has been confirmed, and many new technologies have been estimated to improve on the effectiveness of this delivery mode.
Artificial Intelligence and Machine Learning
The use of artificial intelligence and the increased employment of machine learning enable banks to assess clients’ data, subsequently offering requisite services. They can also help in enhancing the level of protection from fraud and risk identification.
Expansion of Services
Thus, with the ongoing innovation across the banks, such services as investment advisory and insurance can also be delivered through doorstep banking services.
Global Reach
Based on the achievements of doorstep banking services, it can be stated that similar facilities can be developed for various countries around the world and can help to involve segments of people who have not previously had access to banking services. This model can be applied to different markets depending on the requirements and issues of a specific area.
Blockchain Technology
In doorstep banking transactions, it is evident that blockchain technology increases the security and transparency of the reported transactions. Explaining blockchain, authors highlight that the use of the distributed open database can reduce fraud cases and enhance people’s confidence in the banking sector.
Finally, by using smart contracts that are built on blockchain, some procedures like the management of loans, paying, and retrieving money from people’s homes can become easier with doorstep banking.
Please Read: The Best Digital wallet companies To Consider While Accumulating Crypto
Internet of Things (IoT)
Some of the applications that can complement doorstep banking include: the effectiveness of doorstep banking can be improved with the integration of IoT devices, including smart meters and sensors. IoT stores market information in real-time, assisting banks to design their services in a personalized manner.
Likewise, the IoT can also be applied to increase efficiency in the banking industry, whereby specific operations like billing and account checking can be done through door-to-door services.
Conclusion
It is therefore correct to conclude that digital technology is powering doorstep banking and changing customers’ experiences with firms. Doorstep banking can therefore be considered a transformation and improvement in the banking sector due to reasons such as improved access, convenience and financial inclusion.
Doorstep banking still has a promising future in the near future since more technological enhancements are yet to be realized in order to suit the requirements of customers across the globe.
